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Government Flip-Flops on Penalties on Multiple House Ownership

Government Flip-Flops on Penalties on Multiple House Ownership

Posted November. 17, 2004 23:01,   


Public jitters continue over when the government will introduce penalties on the transfer tax for households owning three or more houses.

This is due to the fact that the government flip-flopped—it first said it would introduce them in January of next year; then it said it would reconsider the plan; and then it said it remained undecided about the plan. Also, the government’s indecisiveness is causing confusion in the real estate market.

On November 17, the Ministry of Finance and Economy said it would charge 60 percent of the difference in the transfer of ownership as penalties on real estate transactions involving households with three houses starting in January of next year after a one-year suspension.

However, Finance Minister Lee Hyun-jae said, “It’s needed to reconsider the introduction of the penalties during next year.” He added, “We are considering an extension of the suspension.”

Earlier, some Uri Party lawmakers asserted that the introduction of the penalties should be delayed to prompt owners of multiple homes, who would have to pay more taxes as a result of the introduction of comprehensive real estate taxes, to sell their extra houses.

Finance Minister Lee’s remarks in favor of the extended suspension were seen as the government’s acceptance of these lawmakers’ proposals.

“The government-party discussions on the extension have yet to take place,” said Lee Jong-gyu, the taxation director at the Ministry of Finance and Economy, on November 17. “The extension is a legislative issue that should be decided on at the National Assembly.”

Commenting on the penalties, chief policymaker Hong Jae-hyung of the Grand National Party said on November 16, “It is all up to the government.”

The parties shifts the responsibility to the government, and the government shifts it back to the parties.

As the originally scheduled introduction of the penalties is getting closer, the lack of the final decision on it strands the market.

Recently, many owners of multiple homes, who have put up houses for sale, are more frequently pulling them off the market again, said real estate industry insiders.

Jong sik Kong kong@donga.com